Olean Business Development launches revolving loan fund for area startups

OLEAN — Officials hope a new revolving loan fund will help new businesses in and around the city get off the ground.

The Olean Business Development Corporation announced the launch of a new $700,000 revolving loan fund for local startup businesses on Wednesday, utilizing aid from Siemens Energy.

“This fund is primarily targeted for small startup businesses, which we define as being in business three years or less, with no more than 50 employees, located within New York State and within 10 miles of the center of Olean,” said OBDC President and Executive Director Bob Forness. “Some preference will be given to new energy supply chain startups, but all other types of businesses are more than welcome to apply.

“Loans will range between $5,000 to $100,000,” Forness added. “Those selected for the loans will be required to join a cohort with other recipients and meet bi-monthly to share ideas, concerns and successes.”

The loans will be for up to five years, and are designed to be start-up friendly — only the interest will be due in the initial years of the loan, and the principal and final interest payment will be due at the end of the loan period. The interest rate will be pegged at the annual, mid-term applicable federal rate established by the IRS, which is updated monthly and was set at 4.34% for August.

Forness said there are no pre-set definitions or conditions on how the funds can be utilized by the start-up businesses.

“But business owners will have to submit, initially, a one-page pre-application of why they are asking for the loan — the who, what and why, if you will,” he said. “That will be followed — if they are chosen to move forward — with a site visit followed by a more financially detailed application. The committee will then make a final decision after this due diligence.”

Many common lending options are not always available to the kinds of startups that will be serviced by the program, officials said.

“For us, this is about building relationships with the businesses and helping them to fill a need in their financial picture when it is too early for them to secure funding through traditional means. We understand some of these loans may be high risk,” Forness said, “but at the same time, these loans close a gap in Olean’s entrepreneurial ecosystem by helping startups to move forward in their planning and growth. The area’s entrepreneurs need that early financial support, with startup friendly terms and conditions, to help them on their journeys.

“With the early funding gap closed with this program, OBDC continues to strive to fill in other gaps in the ecosystem” he added, “particularly the need for a local industrial incubator; support for second stage growth businesses; and business succession planning. OBDC works to fill these gaps with our collaboration partners at JCC and St. Bonaventure University.”

The funding comes from Siemens Energy, which announced a $1.66 million pilot program in 2021 after announcing that the firm would move manufacturing operations out of the city in 2022. Originally managed by the Jamestown Community College Foundation, some of the funds were transferred this year to OBDC to run the revolving loan program. The award also benefited JCC by helping to bolster workforce training programs, establish The Hatch Small Business Incubator, and fund other related programs; and the city of Olean received $250,000 to help develop a new comprehensive plan.

For more information, visit www.oleanbd.com/rlf.

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